The existence of a business in the “matrimonial pot” of assets – regardless of its origin (be it an inherited family business, a partnership started by the couple themselves or a new venture started by one of the parties prior to or during the marriage) – can throw up a number of different and complex considerations when looking at the division of finances upon divorce.
Some of the more obvious issues which might arise include:
• Correctly valuing the business or shares in the business;
• Preserving the business asset base and income stream derived from it whilst providing fairly for both of you; or
• Dealing fairly with the business bearing in mind its original origins e.g. the difference between an inherited business or one jointly established during the relationship.
Less obvious considerations may also arise, including the requirement for careful tax efficient structuring, the need to maintain stability within the business if, for example, there is a liquidity call, and the existence of restrictions on the sale and transfer of shares amongst others. It may be appropriate to consider giving one of you a greater share of the “pot” than you might otherwise have been entitled to in order to reflect the inherent risk and likely illiquidity of taking on the business.
The family courts have a broad discretion when assessing the most appropriate way to deal with all assets upon divorce, including the family business. The aim is to achieve a “fair” outcome and where possible they will seek to preserve the “goose which lays the golden egg”. However, that rule is not sacrosanct and if fairness requires it then the “goose may have to go to market” and the sale of all or part of a family business can be ordered.
We can advise you throughout this process on any issue which may be thrown up by the existence of a family business. We have close links with accountants and other professionals who may be needed to value a business interest or provide tax advice and we also have large corporate and commercial teams who can advise on the post divorce restructuring of businesses, shareholders agreements, share transfers etc. We can also advise on ways to protect your interest in a family business by, for example, entering into a pre or post-nuptial agreement.
